I know what you're thinking - I'm a financial planner so of course I think you should pay for financial planning. And yes, I am clearly biased here and am completely willing to admit that. But before you dismiss me because of my inherent bias, understand that I'm writing this to help you.
For years people have thought "financial advice" or "financial planning" meant having someone manage their assets or sell them products like insurance and annuities. Millions of people out there currently have a "financial advisor" or "financial planner" or "wealth manager" or "fill in your title" who (they think) is providing real advice. And most of them have no idea what they are paying that person. Why? Because the fee is hidden. It's deducted from your portfolio regularly based on a percentage of the total value. Or maybe it's paid in the form of a commission on the insurance or annuity product you bought. The commission isn't disclosed and unless you read through pages of fine print, you have no idea you just paid a 5% up front fee for that product.
This isn't financial planning. And it's not what you should be paying for. Sure, you need someone to help manage your portfolio, but do you need to pay 1% of your assets for it? Of course you need to have insurance, but does it make sense to buy a product with a big commission? Annuities can sometimes fit in your financial picture, but should you buy one just because it helps the salesman earn a trip to Hawaii?
Real financial planning means understanding your values, helping you craft goals, then creating a plan to reach those goals. It means being there for you if/when that plan goes off course and helping you get back on track. It means providing advice when you face complicated financial decisions. A real financial planner is objective and acts as a fiduciary by putting your interests first. A real financial planner cares more about you than they do about making money.
Real financial planning sounds nice doesn't it? Then why is it so hard for us to justify paying for it? Because it's not tangible. You don't walk out of your meeting with a product or solution for all your issues. Instead you'll have answers to some questions, along with a plan and a partner who you hope will help you reach your goals over a long period of time. Sometimes you might not see the benefit of the service for a number of years, and that is difficult. Humans crave instant gratification. We can't stand waiting, as much as we might try to tell ourselves that "good things come to those who wait".
While we don't provide a tangible product that cures our natural craving for instant gratification, we do often see an immediate benefit. We see the weight lifted off our clients' shoulders, the sigh of relief, their ability to sleep better at night. It's impossible to put a price on that, yet that is exactly what makes it worth paying for. So what is the price?
To us, that price shouldn't be based on your assets and how rich or poor you are. It should depend on how valuable that service is to you. When we determine a price for our services we look at the complexity of your situation. We walk through exactly how you want us to help you. We look at how much time it will take us to do that. We look at all the other costs we incur in providing this service to you. We then come up with a price that we believe is fair to both of us. It's not hidden and it's paid directly to us.
Yes, we still provide all the services typically associated with a financial planner. We will manage your portfolio for you or work with your other asset managers to make sure the total portfolio makes sense for you. We will help you evaluate insurance needs and run retirement scenarios. We will prepare your tax returns and do ongoing tax planning. The list of what we provide our clients goes on and on. But the world is changing and many of these services are being automated to a certain extent. Our goal is to take advantage of this automation to increase our efficiency. This frees us up to spend more time providing REAL advice. Valuable advice that is worth paying for.
Want to talk to a REAL financial planner? Schedule a time to talk to me.